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Simplicity in the black after two years

New not-for-profit fund manager Simplicity is in positive cashflow territory about 18 months ahead of schedule, founder Sam Stubbs says.

Wednesday, August 8th 2018, 6:00AM

by Susan Edmunds

It reported a deficit of $380,000 in the year ended March 31, compared to a deficit of $147,000 a year earlier.

Fee income of $997,000, from $138,000 the year before, was outpaced by operating costs more than doubling to $1.3 million.

That left it propped up by $900,000 of interest-free loans from Stubbs. He said it had at one point been paying out $50,000 a month in operating costs. “It’s a reasonably stomach-wrenching moment when you’re writing that out each month.”

But he said it was now in positive cash flow and planned to donate $220,000 in the year to March 31 next year. “We’ve just gone cashflow positive this month, which is way more quickly than we expected. We expected to break even in another 18 months so we are ahead of schedule, that gives us flexibility to do things.”

Loans Stubbs had made to the business would need to be paid eventually, he said, and it would be able to pass on benefits to members.

Simplicity works with advisers but only those that charge a fee. It does not pay commission.

Simplicity marks its second birthday today.

Stubbs said it had attracted its $400m in assets under management largely through word-of-mouth referral from investors who appreciated the transparency of its index-tracking investment models. “I think that the finance industry treats people like they’re idiots… nothing we are doing is new. We’re doing what’s worked overseas. It’s an indication of how backwards most of the industry is in New Zealand.”

Simplicity has just under 1 per cent of the KiwiSaver market. It donates 15 per cent of the fees charged to charity.

Tags: KiwiSaver Simplicity

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